Question

A financial manager must choose between three alternative investments. Each asset is expected to provide earnings over a​ three-year period as described below. Based on the wealth maximization​ goal, the financial manager would​ ________.

Answer 1

Answer: A

Explanation:

The shareholder wealth maximization goal states that management should seek to maximize the present value of the expected future returns to the owners (that is, shareholders) of the firm. The longer it takes to receive a benefit, such as a cash dividend or price appreciation of the firm’s stock, the lower the value investors place on that benefit. Also, the greater the risk associated with receiving a future benefit, the lower the value investors place on that benefit. Since Asset A promises more benefits in the short run, it is better to choose option A.

Answer 2

Based in the wealth maximization the manger would choose $21,000 $9,000 $15,000. Thus the option A is correct.

What is an alternative investment ?

The alternative investment is an investment that includes assets and class except for stocks, bods and cash. This terms refers to the tangible assets as precious metals. The shareholder to wealth maximization states the goals that management should seek to maximize the present value for expected future returns to owners of the firm.

Find out more information about the alternative investments.

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